Mizuho Downgrades Circle to Underperform Over OpenUSD Threat

Japanese investment bank Mizuho has downgraded Circle to underperform from neutral and cut its price target to $50, citing the threat posed by OpenUSD's business model.

The analysts led by Dan Dolev argued that Open USD, a dollar-backed stablecoin unveiled on June 30 by the Open Standard consortium, could fundamentally alter CRCL's long-term economics. The consortium counts over 140 partners, including Mastercard and Coinbase.

Mizuho also noted that Circle's $USDC has lost momentum in recent months, with its circulating supply falling to about $73 billion from nearly $80 billion in March. This decline comes as the stablecoin market has shrunk by roughly $10 billion since May amid softer crypto trading activity and growing competition.

The bank's analysts pointed out that Open USD charges a small operating fee and distributes most reserve income to issuers and distributors, which could pressure Circle's distribution partners to demand a larger share of reserve income over time. This risk is reflected in Mizuho's raised estimate for Circle's distribution and transaction costs in 2027 to 73% from 64%, cutting its adjusted EBITDA forecast to $699 million from $1.09 billion.